Solar Making Big Strides to Power the Developing World

May 08, 2014 | posted by The Institute

As we go about our daily lives using smartphones, computers and other technologies, it’s hard to believe that more than 2 billion people globally still live without electricity. According to the International Finance Corporation $37 billion is spent on fossil fuels to power the developing world each year. However, much of this population lives in areas where it is quite sunny, making solar energy an ideal solution. Several solar companies have developed affordable technology and essential financing mechanisms to bring renewable energy to those who need it most, and are now celebrating significant milestones.

Solar lighting manufacturer and distributor d.light, which won the Zayed Future Energy Prize in 2013, has been working to bring solar solutions to the developing world since 2006. It announced today that is celebrating the sale of 125,000 solar home systems. These systems include two hanging lamps and a portable lantern that can last up to 15 hours on one charge. Though the company has distributed more than 6 million solar-related products, it believes that these self-installed, upgradable systems hold significant opportunity for homes and small businesses.

Each system costs about $120 upfront, but customers can take advantage of a wide range of finance mechanisms that are making the systems much more affordable by eliminating high upfront costs. According to Donn Tice, chairman and CEO of d.light, the home system can be financed through micro-financing institutions. Customers can bring their systems home, install them, and then make weekly or monthly payments until they own the system.

Customers can also can take advantage of a “pay-as-you-go” system, where the customer can install the system, and then make payments as often as they can. They system will work for a designated amount of time with each payment, until they eventually own the system. “If they buy more credits sooner, they own the system sooner,” explained Tice. Payments are made through scratch cards, like buying minutes on a mobile phone. A special number is inputted into the system, which allows it to function. Depending on the location, system owners can even make payments through their mobile phones and activate the system via a microchip. According to Tice, financed systems ultimately cost around $150 to $160.

Also celebrating a major milestone, non-profit SolarAid sold its one-millionth solar light in April. The Africa-focused company, which Google awarded nearly $770,000 for its Global Impact Challenge last year, trains residents in rural communities to sell solar lighting, not only bringing power to the people, but also boosting jobs and local economies. According to the company, it has grown from selling 1,000 lights per month in 2010 to more than 50,000 per month as of March 2014.

“SunnyMoney’s soaring sales is by no means a job done. But it sets us on our path to proving an alternative to the fossil fuel dependency that damages our planet whilst locking millions into a cycle of poverty,” said SolarAid chairman Jeremy Leggett in a release. “We hope that our business model for tackling climate change and poverty can set a precedent worldwide for a new kind of renaissance company; whose business will never compromise its social goal.”

Both companies agree that a huge barrier for market penetration is education and distribution. Many customers struggle to make the switch from fossil fuels, a technology they’ve been accustomed to for their entire lives, and adopt solar.

“In the last year, we have worked closely with teachers who act as solar advocates to raise awareness, instill trust and create channels for solar lights to be purchased in rural villages,” said SolarAid CEO Steve Andrews. “Once people see a neighbor’s light shining bright, demand grows. We then engage local agents to stock and sell solar products.”

Tice said that d.light and other companies have made huge strides in the past few years. He compared solar growth to the cell phone industry in Africa.

“The penetration of solar products like ours is at about 5 percent today, the same as the cell phone industry in 1998. Ten years later, cell phones have 70 percent market penetration,” he said. “What drove it is the same market drivers that we have developed for solar – cheap technology and financing. There is no reason why the industry shouldn’t rocket forward.”